ePSWT
by Kevin Canning
 
 

ePSWT

Professional Services Withholding Tax (PSWT) is being moved from a paper-based system to an electronic platform known as ePSWT. The new system will be in place from 1 July 2021 and will operate through ROS.                                                                                               

The Current System

Currently, when a public body (such as a university or government agency) pays a service provider for professional services, PSWT is withheld at the rate of 20% from the payment. This would result in the service provider receiving 80% of the payment with the remaining 20% being withheld and remitted to Revenue. The public body would then give the service provider a Form F45 which shows the invoiced amount and the amount deducted. The service provider then uses this 20% as a prepayment against future tax liabilities, or in some cases seeks a refund of tax withheld.

 

New System

With the introduction of ePSWT, there will now be no more paper F45 Forms and the system will operate through ROS. When a public body makes a payment to a service provider, it will submit a payment notification online in ROS (similar to how RCT works) and deduct 20% from the payment.

 

Benefits of ePSWT System?

In our view, the new ePSWT scheme should fix many of the pain points in the old system and it is a welcome addition to Revenue’s modernisation improvements of recent years. Some benefits include: 

 

Record Keeping

There will no longer be a need to keep PSWT paperwork and prepare reconciliations by Revenue, the service providers, or the public bodies. This should cut down on large amounts of administrative work involved in the PSWT process and protect the environment through less paper use.

All records will be kept in ROS and will allow users to search for specific payment notifications, amend payment notifications, generate PDF copies and even run reports which can be exported.

 

Interim Refunds

The process for interim refunds will be simplified. Previously, a service provider would have to submit paper F45 Forms to Revenue and prepare a reconciliation. Now a service provider can use ROS to submit refund requests. This is a much welcomed benefit to service providers interacting with public bodies.

Please note that any interim refunds that cross the period of June to July 2021 will require two separate requests. The June request would be paper based on the current system with the July request using the new ePSWT system.

 

F35 Filing

A benefit for the public bodies is the change in how F35’s will be filed. In the old system, a full schedule of payments would need to be submitted for the calendar year alongside the F35. With the new system there will be no need to submit the schedule.

One downside to the first year of this system is that two F35s will be required for 2021. This is due to the fact that the old system will run for the first half of the year and the new system in the second half. The two period will operate as follows:

  • The first F35 will be completed for the period 1 January 2021 – 30 June 2021 (F35 plus the supply of the payment schedule up until 30 June) and will need to be submitted by 23 August 2021.
  • The second F35 from 1 July 2021 to December 31 2021 (Just the F35) and will need to be submitted by 23 February 2022.

 

Summary

ePWST will be quite a change from the old system. However, the change will mostly occur for public bodies learning how it will operate on ROS. For service providers, the change should have minimum negative impact on business. Most of the heavy lifting should be done by public bodies making the payment notifications on ROS.

 

How Can Quintas Help?

If you have any further questions on the incoming changes to the PSWT system and you are either a service provider or are employed by a public body, please do not hesitate to contact Kevin Canning for further advice and guidance.

 

Kind Regards,

Kevin Canning